Stewart announces first quarter earnings

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HOUSTON, April 28 2005 -- Stewart Information Services Corporation (NYSE-STC) today reported results for the first quarter of 2005. Revenues for the first quarter of 2005 were the highest first quarter revenues in the company's history. Revenues were $512.6 million, an increase of 10.3 percent compared to the same period of 2004. Net earnings for the three months ended March 31, 2005 were $10.7 million, or $0.59 per diluted share, compared to net earnings of $11.1 million, or $0.61 per diluted share, for the first quarter of 2004.

Book value per share increased 0.8 percent to $38.79 as of March 31, 2005 despite a decline of $4.7 million in the company's bond portfolio, which resulted from an increase in interest rates. The unrealized losses in the portfolio were included in other comprehensive earnings, a component of the company's stockholders' equity.

Stewart's incoming orders in the first quarter of 2005 were down 1.7 percent from the same quarter a year ago. Orders in the month of March 2005 were down 8.4 percent from the same month of 2004. (These order figures are adjusted to the same number of working days.)

Although higher-margin commercial transactions increased this year, profit margins decreased slightly in the first quarter compared to the same period of 2004. Higher employee costs and continued investment in technology-driven products and new services were the primary reasons for the margin decline. Acquisitions in higher-cost markets also reduced margins in 2005. The company believes its on-going investment in technology will drive future market share, productivity and profits.

"An exciting development this quarter, announced earlier, was the nationwide rollout of PropertyInfo.com, a single point-of-access for real estate information and integrated tools critical to the real estate transaction processes," said Stewart Morris, Jr., president and co-chief executive officer. "This site brings together public records, aerial imagery, maps, and data access capabilities needed daily by real estate and title professionals. Included are access to online title searches and analyses, mapping technology, tax records, document images, geographic information systems, imagery, flood zone determinations and UCC searches. Data and services vary in depth by locality across the country," Morris said.

"Sometime in the second quarter of 2005 we expect to log the one millionth transaction on SureClose®, our 24/7 online system," added Morris. "SureClose is the most widely used transaction management system in real estate. This platform has three major benefits: managing documents in the title office, communicating with customers and archiving file information. We expect continued productivity increases and efficiencies while providing magnificent service to our customers."

"A strong development in the first quarter of 2005 was the significant increase in commercial business and profitability generated by our National Title Services (NTS) operations," said Malcolm S. Morris, chairman and co- chief executive officer. "This growth is a function of our high-quality and high-performing team members at NTS. In addition to providing commercial services at 18 NTS offices across the country, NTS also is active in providing nationwide relocation services for corporate and real estate customers."

Morris also noted that in the first quarter of 2005 the company acquired title agencies in Alaska, Colorado, Florida, Illinois, Ohio, Oregon and Tennessee. "We focus on strategic growth locations with high potential," added Morris.

Stewart was again included in the FORTUNE 1000 list, ranking number 717 and remains on Standard & Poors' SmallCap 600 Index and six Russell Indexes.

Stewart Information Services Corporation is a technology driven, strategically competitive, real estate information and transaction management company. Stewart provides title insurance and related information services through more than 7,800 issuing locations in the United States and several international markets. Stewart meets the needs of the real estate and mortgage industries through the delivery of information services required for settlement using e-commerce. These services include title reports, flood determinations, document preparation, property reports and background checks. Stewart also supplies post-closing services to lenders, automated county clerk land records, property ownership mapping, and geographic information systems for governmental entities. Stewart provides expertise in tax-deferred exchanges. More information about Stewart can be found at www.stewart.com .

This press release may contain forward-looking statements, which include all statements other than statements of historical facts. Forward-looking statements are not guarantees of performance and no assurance can be given that Stewart's expectations will be achieved. In particular, historical order counts do not necessarily indicate future revenues because Stewart cannot predict the number of orders that will result in closings.

Stewart Information Services Corporation

 

Three months


ended March 31


2005    2004

Revenues

$512,583,000

$464,892,000

Net earnings

$10,666,000

$11,140,000

Average shares - basic
18,123,000
18,070,000

Average shares - diluted

18,225,000

18,181,000

Earnings per share:

Basic

$0.59

$0.62

Diluted

$0.59

$0.61

STEWART INFORMATION SERVICES CORPORATION
STATEMENTS OF EARNINGS
(Thousands of dollars, except per share)

 

Three months


ended March 31
2005 2004

Revenues

Title Insurance:

Direct operations
212,874

182,534

Agency operations

275,306

257,887

Real estate information services

17,627

17,615

Investment income
6,308
5,152
Investment gains - net
468
1704

512,583

464,892

Expenses

Amounts retained by agencies

225,208

210,052

Employee costs

155,617

134,350

Other operating expenses

80,997

73,981

Title losses and related claims

22,131

19,280

Depreciation and amortization

7,806

6,976

Interest

617

218

Minority interests

2,923

2,148

495,299

447,005


Earnings before taxes

17,284

17,887

Income taxes

6,618

6,747

Net earnings

10,666

11,140

Average number of diluted shares (000)

18,225

18,181

Earnings per share - diluted

0.59

0.61

Segment information:

Title revenues

494,956

447,277

Title pretax earnings

15,555

16,653


REI revenues

17,627

17,615

REI pretax earnings

1,729

1,234

Selected financial information (000):

Cash flow from operations

14,287

25,825

Title loss payments - net of recoveries

16,535

12,940

Other comprehensive (losses) earnings - net
of taxes

(5,127)

1,673

Number of title orders opened

212.0

222.5


March 31

Dec 31

2005

2004

 
Stockholders' equity 703,106 697,313
Number of shares outstanding (000) 18,127 18,121
Book value per share 38.79 38.48

STEWART INFORMATION SERVICES CORPORATION
BALANCE SHEETS (condensed)
(In thousands of dollars)

March 31

December 31

2005

2004

Assets

Cash and cash equivalents

96,856

121,383

Short-term investments

194,135

181,195

Investments - statutory reserve funds

402,659

401,814

Investments-other

69,569

68,793

Receivables

73,985

80,277

Property and equipment

83,754

83,391

Title plants

54,110

52,679

Goodwill

142,840

124,636

Intangible assets
18,901
16,988

Other assets

61,111

62,197

 

1,197,920

1,193,353

Liabilities

Notes payable

63,844

49,930

Accounts payable and accrued liabilities

83,376

101,544

Estimated title losses
306,345
300,749

Deferred income taxes

26,425

29,335

Minority interests

14,824

14,482

 
494,814
496,040

Contingent liabilities and commitments

Stockholders' equity

Common and Class B Common Stock and
additional paid-in capital

144,389

144,135

Retained earnings

553,961

543,295

Accumulated other comprehensive
earnings

8,661

13,788

Treasury stock

(3,905)

(3,905)

Total stockholders' equity

703,106

697,313

 

1,197,920

1,193,353

April 28, 2005


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